Why are Credit Scores Different when Pulled at Different Places???

I recently was asked to explain why credit scores pulled in different environments will often result in different scores.

Let’s say you recently went to buy a car. When they pulled your credit at the dealership they found your score to be at a 780. But then, when you went to talk to your loan officer about refinancing your home a couple weeks later, they pulled your score again and it was only at a 720. Whether you were the professional helping a client into a loan, or someone who was looking to get into a loan yourself, you probably have had it happen. The big question is, why?

 Credit points are not like socks in the laundry, when they disappear, there actually is a reason WHY.

Here is that reason.

Most people are aware of the big, giant, all knowing company called FICO (originally called Fair, Isaac and Co). This is a data analyzing company and 90% of lenders use this score to determine loan eligibility. Meaning, if FICO and your wallet say you can have it, chances are, you can have it.

Interesting though, is that there is not just one FICO score. In fact, there are 56 different algorithms used by FICO. Mortgage loan providers really only use 8 of those to run credit for home loans. Car dealerships DO NOT use the same FICO credit algorithm as mortgage professionals.

The typical FICO score takes many things into account and I could bore you with a pie chart here…but I won’t, (you are welcome). Instead just know that in this pie chart there are things like, your payment history, types of debt, length of payment history, etc.  Each of those items in the pie chart are given a certain amount of power over your credit score. A car dealership will put much more emphasis on the items that are auto-loan specific, and a mortgage professional will want a score reflecting risk behavior specific for home loans.

There are other ways to get scores and one popular site offers people free credit scores all day long, (and shall go nameless here…but you know who I am talking about). Now, if you were to pull your score with them chances are your score will be dramatically different then when a loan officer pulls it.

This is because this company does not even use FICO score algorithm! They use something called a Vantagescore. Although they may use similar data to obtain their scores, they are different and most likely, they will each give you different scores even if pulled at the same time.

Hopefully, this article cleared up a little of the confusion on credit scores and reporting. If you would like to know more about CreditAdvisor inc, or more about a credit score topics, feel free to send me a request at [email protected] or give me a call at 720-663-0592.